Riding Bitcoin’s digital roller coaster

haircutbitcoin16 Nov 2013 / OC Register – Scott Nguyen emerges from a salon chair at Splitends Salon in downtown Santa Ana to pay for his freshly cut hair. For the past 20 years, the Laguna Hills resident has gotten the same trim every three or four weeks from the same guy. The only change is that about six months ago, Nguyen started paying in digital cash.

Today’s haircut will cost 0.1285 bitcoin.

Scott Nguyen, right, scans Christopher Hall’s bitcoin request code after his Saturday haircut in Santa Ana.

What’s a bitcoin?

What it is: An alternative form of currency that can be exchanged in the open market and used to buy goods. It is not backed by the U.S. government and is all electronic — there is no physical bitcoin.

How you get it: Users can buy or sell bitcoins on several exchanges using dollars or other currency. They can also be “mined,” in which high-powered machines perform math problems in search of new coins.

How to pay with it: Bitcoins are transferred between digital wallets, which can be stored on mobile phones or computers. Senders create unique codes on their phones, showing the amount requested and wallet address. Recipients approve the transaction by scanning the codes with their own device.

How it’s valued: Bitcoins can be converted to traditional currencies on various exchanges. The value of one bitcoin this week passed $400.

What it can buy: Not much, so far. A small number of local merchants accept bitcoins. On social-news website Reddit, users can use it to buy Reddit Gold, which lets visitors shut off ads and add other feature.

Is it taxable: The IRS has yet to issue rules on the reporting of bitcoin transactions. But the U.S. Government Accountability Office published a report in the spring that says goods or services purchased with the digital currency could produce taxable income. Bitcoin miners also may be earning taxable income, the GAO adds…… Read more


Sources: bitcoin.org, en.bitcoin.it/wiki, reddit.com

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